Balanced Approach To Decommissioning Needed

BusinessNZ and the BusinessNZ Energy Council (BEC) have registered their opposition to proposed rules for decommissioning oil and gas infrastructure.

The Crown Minerals (Decommissioning and Other Matters) Amendment Bill sets stiff new financial requirements and penalties for companies decommissioning energy infrastructure, which BusinessNZ and BEC say are disproportionate to the risk.

Continued investment in oil and gas is needed to ensure a smooth transition to lower emission fuels, BusinessNZ’s and BEC’s submission says, and the proposed rules would jeopardise that investment.

Maintenance of current infrastructure is important to support the development of future fuels such as hydrogen or biogas, says BEC, and it should be remembered that gas will be required until at least 2035 according to CCC modelling, and 2050 according to BEC’s TIMES modelling. The Bill could undermine energy security by preventing further investment in existing gas fields and infrastructure, affecting affordability and therefore sustainability, BEC says.

The Bill would also have the unusual effect of making a former owner liable for meeting the costs of decommissioning energy infrastructure if its new owner fails to do so.

BusinessNZ and BEC say this proposed rule would create a perpetual liability on energy businesses and should be strongly opposed: "We can think of no other situation in New Zealand where a business is legitimately sold, and the seller is responsible for any liabilities which might be accrued by the new owner. This is a fundamental change to how business transactions work. It will create significant uncertainty, have a chilling effect on investment and will make New Zealand a less attractive place to invest or do business."

Collaboration with industry is required to develop a more balanced approach to decommissioning, the submission says.

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